Uber might be creating new markets, says City of Ottawa report

Ottawacitizen.com
Oct. 22, 2015
By Joanne Lacius

Uber might be creating new markets, not merely cannibalizing work from licensed cab drivers, suggests a report commissioned by the City of Ottawa.

Uber and other Internet ride-hailing firms have responded to markets that were poorly served by taxis, including the suburbs and low-income people, and might be “generating a new, larger ridership pie,” says the report from the Mowat Centre, a Toronto policy think-tank.

The report, released Thursday, uses Uber’s preferred description of its service as “ride-sharing,” even though many suggest that it doesn’t meet the definition of shared travel in which a driver already heading to a destination accepts passengers for a fee.

“Despite similarities between taxis and ride-sharing, there can be marked differences in the characteristics of users and their experiences - with ride-sharing ultimately encouraging greater mobility for certain groups of users,” said the report, which cites a New York City study reported by the Economist magazine.

The number of yellow taxi rides in New York’s central business district remained about the same between 2013 and 2015, according to the Economist report. In the rest of the city, however, yellow taxis lost about a million rides to Uber. At the same time. about three million new rides were created, including about a million attributed to Uber.

While customers in Manhattan were well-served by existing cabs, the same was not true of the outer boroughs, said Sunil Johal, the lead author of the Mowat Centre report, in an interview on Thursday. About 22 per cent of Uber rides start outside of Manhattan, compared with 14 per cent of taxi rides.

“There might be an opportunity for Uber to grow the pie,” said Johal.

But Amrik Singh, the president of the Ottawa taxi drivers’ union, doubts that this could happen in Ottawa. A ride from Kanata to downtown in a taxi costs about $55, and an Uber ride, he says, would not be significantly less. (The Uber online estimator says a downtown-to-Kanata ride in a standard car costs between $30 and $39. A ride in an SUV or van is $54 and $71. “Surge pricing” at times of high demand can add significantly to the fare, however.)

Singh believes customers in the suburbs would have too many concerns about issues like safety and insurance. “Nobody is going to take Uber because of a dollar or two.”

Susie Heath, a spokeswoman for Uber, said these services create “more choice and more reliable and affordable alternatives to driving a personal vehicle.” Uber believes both consumers and communities as whole will benefit.

Johal’s report does not make recommendations to the City of Ottawa. However, policy-makers will have to take this information into consideration when they are considering new regulations, he said.

The problem is that there is little data from other cities, and the New York situation doesn’t necessarily translate in Ottawa. However, it does suggest that location should play a role in regulation.

“There may not be a one-size-fits-all solution. You might have to take a more nuanced approach,” said Johal.

His report also points out that information collected by Uber can be valuable to cities. This year, Boston entered into a data-sharing agreement with Uber, with trip data used to ensure the company is serving all neighbourhoods adequately and to improve Boston’s own transit routes in under-served neighbourhoods.

A comprehensive review of the Ottawa industry to be completed by the end of this year. To view all the reports released so far, visit ottawa.ca/en/city-hall/public-consultations.

By the numbers

$60M: Uber’s valuation in 2011, in U.S. dollars

$51B: Uber’s valuation in 2015

300: Number of cities Uber operates in

1M: Trips are taken daily in Uber cars

10X: Increase in Uber use in New York City between 2013 and 2015

84: Per cent of Ottawa residents who support or somewhat support changing Ottawa bylaws to allow Uber to operate, according to a Nano survey commissioned by Uber

2,600: Estimated number of taxi drivers in Ottawa

1,000: Estimated number of Uber drivers

$6: How much more an hour, on average, an Uber driver earns compared to a taxi driver, according to a study conducted by Uber and Alan Krueger of Princeton University.